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Friday, 30 January 2015

Asia wavers, but Wall Street gains lend support

Asian shares wavered between positive and negative territory on Friday, as a late earnings-led surge on Wall Street helped counter persistent concerns over global growth and sagging Chinese shares.

Spreadbetters predicted the U.S. luster would rub off on European bourses when they opened, with Britain's FTSE 100 expected to open up around 19 points, or 0.3 percent; Germany's DAX to gain about 58 points, or 0.5 percent; and France's CAC 40 to rise 34 points, or 0.7 percent, according to IG.

"With Asian markets generally supported, we should see a positive open in Europe," Chris Weston, chief market strategist at IG, wrote in a note.

"We all know European markets have performed strongly as traders priced in the idea of liquidity making its way into the equity market," he said.

MSCI's broadest index of Asia-Pacific shares outside Japan edged down about 0.2 percent on the day in late trade, but was still on track to gain more than 1 percent for the month.

The Shanghai Composite Index lost 1.0 percent, set for a fourth consecutive day of declines, as this week's investigations into stock margin trading made investors wary.

Overall, though, regional sentiment got a lift from Thursday's U.S. gains, which saw major U.S. indexes surging almost 1 percent or more as Apple Inc and Boeing Co extended gains after strong earnings reports this week.

U.S. jobless claims figures also helped bolster the mood, with the number of Americans filing new claims for unemployment benefits last week marking its biggest weekly decline since November 2012, falling to its lowest since April 2000.

Japan's Nikkei stock average added about 0.4 percent, clawing back some of the 1.1 percent lost the previous session, its biggest one-day drop in two weeks. Strong company earnings led by Nomura Holdings and Advantest Corp buoyed sentiment, but a sell-off in index-heavyweight SoftBank Corp limited the gains.

For the week, the Nikkei gained 0.9 percent, and added 1.3 percent for the month.

Mostly upbeat data released before the market open showed Japan's core consumer inflation slowed for a fifth straight month in December due to slumping oil prices, though factory output rose 1.0 percent, helped by a much-awaited rebound in exports and the jobless rate fell.

"Overseas catalysts still dominate the Japanese market's mood. But with quarterly results being released now, investors are seeing if there is any forward-looking indication on how companies will perform in 2015," said Masaru Hamasaki, head of the market & investment information department at Amundi Japan.

The U.S. dollar slipped against its Japanese counterpart, losing about 0.4 percent to 117.83 yen.

According to Japanese government and central bank officials, the Bank of Japan has put monetary policy on hold and found backing for its wait-and-see stance from advisors to Prime Minister Shinzo Abe, who worry more easing could send the yen to damagingly low levels.

This newfound caution means Japan is set to be an outlier at a time when central banks from Canada to the euro zone to Singapore have eased policy to prop up faltering growth and defuse deflationary pressures.

Expectations of further easing from the Reserve Bank of Australia sent the Australian dollar slumping to its lowest in over five years this week, with the Aussie falling as low as $0.7720. It was last up about 0.2 percent on the day at $0.7777.

The euro added about 0.2 percent to $1.1337, moving further away from this week's 11-year low of $1.1098.

U.S. crude edged down to $44.50 a barrel, moving back toward a nearly six-year low touched overnight on data that showed a rise in already record-high U.S. oil inventories.

Spot gold was up about 0.2 percent at $1,259.10 an ounce after falling more than 2 percent to a two-week low overnight on concerns over a looming increase in U.S. interest rates. Gold is still on track to post its biggest monthly gain in almost a year.

Investors were likely to remain cautious ahead of fourth-quarter U.S. gross domestic product data later on Friday. A Reuters poll tipped the economy to have grown 3.0 percent.